Overall asset effectiveness (OAE) is similar to overall equipment effectiveness and derived based on the OEE concept of lean manufacturing. OAE measures the performance of equipment, machines, and various processes. This concept focused on improving factors within our area of control as well as out of control. In the Overall Equipment Effectiveness factor management is able to decide the planned equipment working time.
The initial journey toward performance measurement is start with overall equipment effectiveness. It involves each and every loss related to performed internally or within scope. The next improvement target to utilize equipment or processes is focused on external parameters affecting asset utilization. Understand the financial effect of the asset, when we procure an asset it is very important to utilize it as per designed capacity because of its direct impact on ROI.
OAE Formula
For measuring the performance of any equipment and processes, there are two different possibilities to measure. Measure performance on a timely basis as well as a unit of production measurement basis. Time basis performance measurement is similar in each and every organization but different in production basis like MT, Liters, Quantity, WT, etc.
Review the attached formula of overall asset effectiveness.
As per below, the attached OAE formula was written based on an output basis. Also, we are able to calculate the OAE formula on time bases like actual productive time divided by theoretical time or maximum time availability to run a process or equipment.
Actual output – actual output is the production of equipment or processes certain period of time.
Theoretical output – theoretical output measured based on considered maximum output able to produce of equipment or processes or its maximum capacity to produce items or products.
Types of losses in Overall Asset Effectiveness
Management Loss
Management loss is defined as points within the management control limit. Management is focused to improve equipment or process performance with minimizing management losses. Review attached certain loss points related to management.
- Due to the unavailability of future demand equipment or process is idle.
- Loss due to forcing to stop the production activity due to finished goods inventory being too high (overproduction).
- Losses due to unable to provide resources that match the production environment.
- Losses due to environmental effects include within management control.
Operational Loss
Operational loss includes activities related to the operation. The responsibilities of the production team are to minimize operation losses and improve process performance. Review the below-attached points are considered as operation loss.
- Time loss due to programming activities of equipment or processes.
- Set–up activities.
- Product and process changeovers.
- Material loading and unloading. (not looking within cycle time losses but considered as overall)
- Equipment and processes are idle due to waiting of operational processes like transportation wait, material wait, consumable wait, operator or supervisor wait, etc.
External Failure Loss
In external failure, loss includes points that are not within organizational control, and require the involvement of top management and others vendors to minimize loss. It is very important to measure this loss because due to external failure points our equipment or processes are idle. Review below-attached points for external failure loss.
- Raw material supply delay by the supplier.
- Electricity unavailability.
- Improper weather conditions and not suitable with operational processes.
- Loss due to transportation and logistics issues.
Internal Failure Loss
Internal failure losses are organization is able to control such losses and improved processes. Review the attached internal failure losses as per below attached.
- Loss due to labor issues and production stop. (contract-related, union-related, etc.)
- Loss due to equipment failure.
- Loss due to labor disciplinary issues.
- Processes stop due to line balancing issues.
- The process stopped due to planned maintenance.
- Production loss due to health and safety issues.
- Loss due to internal product or process errors. (Rework and rejection)
- Loss due to consumable supply issues.
- Losses due to internal transportation issues.
Poor Performance Loss
The poor performance loss is depending on 4M such as Man, Machine, Material, and methods. Due to improper working of 4M chances to increase loss. The majority of the production and maintenance team will be responsible for minimizing poor performance loss.
- Loss due to poor man performance.
- Loss due to poor machine performance.
- Loss due to poor material performance.
- Loss due to poor process or methods performance.
Difference between OEE and OAE
It is very important to understand the difference between OEE and OAE because the OAE terms are developed based on OEE. Review the below-attached difference for better clarity.
| Overall Equipment Effectiveness (OEE) | Overall Asset Effectiveness (OAE) |
| OEE measures the output based on equipment available time. | OAE measures the output based on equipment maximum capacity or theoretical maximum output. |
| Management is able to decide the planned equipment time of equipment. | Management is not able to decide on planned equipment or process time, its calculate based on equipment or process capability. |
| For the OEE improvement plan losses are considered within the organizational control level. | For the OAE improvement plan losses are considered within the organizational level as well as outside of the organizational level. |
| OEE was invented by Seiichi Nakajima in 1960. | OAE was invented based on OEE parameters. |